The importance of large companies for mitigation
As COP27 is due to start in Egypt, the world is again focussing on the need for emergency action to combat the negative impact of climate change. Mitigation measures are a priority. The message is clear. We must cut emissions of greenhouse gases very quickly.
Reality shows the scale of the challenge. Investment in renewable energy has never been so high, but we have never been so far away from fulfilling the Paris Agreement. At the beginning of 2022, the Intergovernmental Panel on Climate Change (IPCC) launched its sixth report, showing that the average level of global emissions of greenhouse gases will be the highest in history.
Recent geopolitical conflicts, high inflation around the world and the trend of increasing energy costs make the light at the end of the tunnel seem further away than ever.
There is consensus on one thing: structural problems of decades will not be solved in months. COP27 brings an expectation that visionary pragmatism will be necessary to accelerate decarbonisation during the recession. Governments have encouraged mitigation action while industry, in general, has put more effort into adaptation.
The good news is that the number of companies joining the Science Based Targets initiative has increased year after year. This gives the prospect of large reductions in greenhouse gas emissions over the next two decades. According to Bain & Company, just over 140 companies had joined the initiative in 2018. By September 2022, the number had already passed 3700.
The commitments from large corporations are important as they have greater capacity for innovation, access to capital finance and, principally, bear more responsibility for greenhouse gas emissions. But it would be a mistake to expect companies to provide the solutions."
Dominic Schmal
ESG Director na EDP Brasil
The commitments from large corporations are important as they have greater capacity for innovation, access to capital finance and, principally, bear more responsibility for greenhouse gas emissions. But it would be a mistake to expect companies to provide the solutions.
Global political intervention is required, with countries bringing more boldness to the table, turning the carbon transition into a source of competitive advantage and a way of avoiding the risk of losing green business to other countries. This happened recently with the United States creating the "Inflation Reduction Act of 2022", legislation that allocates USD 369 billion to supporting the energy transition in the country.
COP27, specifically, will look beyond the need for climate mitigation and adaptation through new low carbon technologies. It will also draw attention to other considerations: the socio-economic impact of the consequences of climate change.
According to data from the United Nations Refugee Agency, more than 20 million people are forced to leave their homes every year due to disasters caused by climate change. This displacement is almost double that caused by conflicts and violence.
Egypt, the host country for the Conference, is undergoing a political and social crisis. Many of the countries coming to this conference, principally those most threatened by the climate emergency, have a great opportunity to communicate a stronger message to the rich countries with regard to climate financing. COP27 will be an opportunity for the African continent to draw attention to climate justice in the midst of the discussions about global climate action.
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